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HLS Independent Contractor Process

Under Massachusetts and federal law, the University is required to meet a number of obligations with respect to the treatment of employees, including wage and hour requirements, payroll tax withholding, and provision of workers compensation and unemployment benefits. The University has adopted this Policy to guide local departments or units seeking to engage independent contractors (ICs) and to establish procedures to ensure that individuals are properly classified as employees unless the strict requirements of the IC test are met. The consequences of misclassifying workers as ICs instead of employees may cause the University to fail to meet its legal obligations and give rise to significant liability, including taxes and related penalties, criminal sanctions, and civil liability.

All proposed IC engagements must be reviewed and approved as set forth in this Policy BEFORE engaging the individual, to ensure proper classification. Reach out to your Human Resources Business Partner early on to start a conversation about your staffing needs.  In order to help you prepare for this conversation, consider the following:

How to Initiate the Independent Contractor Process

  1. Contact your department’s assigned Human Resources Business Partner and partner with them to determine whether or not an Independent Contractor Questionnaire is necessary;
  2. Complete a draft of the proposed independent contractor agreement using the University short form model/services consulting agreement to be reviewed by Human Resources, and;
  3. If the engagement is approved as a permissible use of an IC, than submit a completed Independent Contractor Questionnaire (PDF) related to the proposed contract. Please note that your department is responsible for certifying that all information on the questionnaire accurately reflects the terms of the specific contract in question. Accordingly, a new questionnaire must be filled out to accompany each contract, the process for which should begin with a new conversation with your HRBP.

Please be reminded that independent contractor contracts cannot be approved retroactively; all independent contractor contracts must be reviewed and approved by HR and Finance before they are agreed to or signed and before any work commences. The Financial Office cannot authorize payment on any independent contractor agreement that has not been pre-approved in accordance with this process.

Three-part Independent Contractor Test

Under Massachusetts law, every individual receiving payment for services to the University is considered to be an employee of the University unless all of the factors in the following three-part IC test are satisfied.

  1. The worker must be free from Harvard’s control and direction in connection with the performance of the service, both under a contract for the performance of the service and in fact.

    The worker should be free to set their own hours, determine the appropriate tools and methods to use, use their own materials and supplies, set the order in which the services will be performed, and decide where to perform the services.

    There must be a written contract between Harvard and the IC, explicitly stating that the worker has independent control and direction over the work, including the ability to dictate the hours that they will perform the services, and the work should be performed consistent with this statement over the course of the engagement.
  2. The service performed by the worker must be outside the usual course of Harvard’s business.

    The service performed by the individual must be incidental to the operations of the University, rather than a necessary or integrated component of operations.

    In considering whether the services are in the usual course of business, the duration of the engagement is a significant factor.

    This assessment should consider whether the service is a regular and continuing part of the operations of the School, local unit, or department engaging the worker
  3. The worker must be customarily engaged in an independently established trade, occupation, profession, or business of the same type as the service being performed for Harvard.

    To be an IC for Harvard, the worker must be operating an independent business enterprise which offers its services to other clients or customers besides Harvard.

Simplified Process for One-Day Speaking Engagements

A simplified process may be used to retain a third-party speaker for a single day presentation. Where applicable, this process permits the retention of the speaker as an independent contractor without the need to complete the Independent Contractor Questionnaire. The simplified one-day speaker contracting process differs slightly for recorded and unrecorded presentations, as described below.

Recorded Presentations (Audio or Visual)

If a speaker’s single-day presentation will be recorded, the Model Speaker Consent Form for Audio/Visual Recordings may be used in lieu of the Model Consulting Agreements. Note that this consent form must be obtained from any speaker whose presentation will be recorded, even if the speaker will not be paid. If the speaker will be paid, the independent contractor language noted on the OGC instructions on the first page of the Model Speaker Consent Form should be inserted before the form is signed. If the speaker will not be paid, the form must still be signed, but the independent contractor language may be omitted.

Unrecorded Presentations for which the Speaker is Paid

If a speaker’s single-day paid presentation will not be recorded, the Model Speaker Consent Form need not be completed. Rather, independent contractor status may be confirmed via a letter to the guest speaker that includes the following language:

“You understand that in providing these services your status will be that of an independent contractor, free from Harvard’s direction and control. You understand that you are not an agent of employee of Harvard and are not expected or authorized to enter into binding commitments on Harvard’s part.”

The letter containing this language need not be signed by the guest speaker to confirm independent contractor status. It may, however, be prudent to obtain the speaker’s signature for other reasons, such as confirming fee agreements.

Unrecorded Presentations for which the Speaker is not Paid

Retention of a third-party guest speaker for a one-day presentation that will be both unpaid and unrecorded is not subject to the independent contractor policy or the processes described above.

Simplified Process for Certain One-time Engagements

Departments seeking a one-time engagement for less than three months and $3,000 may now take advantage of the new Exception Attestation Form option.  This one-time engagement must still satisfy the 3-part test in the IC policy, and the department must attest this by completing the form.  Once completed, the form may be sent directly to the Finance department along with a completed contract.

Payment Categories and Hiring Methods for Individuals Classified as an Employee

If, upon Human Resource’s review of a completed Independent Contractor Questionnaire (ICQ), an individual is classified an employee, there are several hiring methods and payment categories available.